July, 2010
INTERSTATE INSURANCE PRODUCT
REGULATION COMPACT
The Interstate Insurance Compact creates the Interstate Insurance Product Regulatory Commission (IIPRC) that is developing uniform national product standards for life insurance, annuities, disability income and long-term care insurance. As the Commission adopts procedures and standards for these products, insurers will be able to draft forms for use in all states that have adopted the compact and in which the insurer is licensed.
With the recent adoption of legislation by Missouri, the Interstate Compact has now been enacted in 36 jurisdictions. The 36 states that have adopted the Interstate Compact are: Alaska, Colorado, Georgia, Hawaii, Iowa, Idaho, Indiana, Kansas, Kentucky, Louisiana, Maryland, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, North Carolina, Nebraska, New Hampshire, New Mexico, Ohio, Oklahoma, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, West Virginia, Wisconsin and Wyoming. In addition, Oregon will accept certain IIPRC approved forms, even though it is not an IIPRC member state. The Illinois legislature has passed a bill that would make it the 37th state in the Interstate Compact. Illinois governor has indicated he will sign the bill if the effective date is changed to July 1, 2011.
The IIPRC began accepting filings in 2007. Filings may be made for any product for which Uniform Standards have been adopted. Currently, Uniform Standards have been adopted and are effective for the following product lines:
• Individual Application (Life and Annuity)
• Individual Term Life
• Individual Whole Life Insurance
• Individual Endowment Insurance Product Line:
• Individual Non-Variable Adjustable Life Insurance Product Line:
• Individual Variable Adjustable Life Insurance Product Line:
• Standards for Individual Life Benefit Features (this includes Accelerated Death Benefits, Accidental Death, Waiver of Premium and similar benefits)
• Individual Variable Annuity Product Line (including Guaranteed Living Benefit & Guaranteed Death Benefits)
• Individual Fixed Annuity Product Line
• Individual Annuity Benefit Features (this includes Tax Qualified Plan provisions and Waiver of Surrender Charges)
• Standards for Riders, Endorsements or Amendments Used to Effect Individual Life Insurance Policy Changes.
• Mortality Table Change Standards
• Additional Standards for Indexed-Linked Crediting Features for Individual Adjustable Life Policies
• Additional Standards for Bonus Benefits (for Individual Deferred Non-Variable Annuities)
• Additional Standards for Intermediate Period Endowment Features for Individual Life Insurance Policies (including Return of Premium)
• Standards for Market Value Adjustment features.
States are allowed to opt-out of specific Uniform Standards. Hawaii has adopted legislation prospectively opting out of long-term care insurance standards, though such standards have not yet been adopted.
While it did not opt-out of a Uniform Standard, the state of Washington has issued a statement that it will not accept mix and match filings that involve the Return of Premium Standards. The state will recognize IIPRC approved filings that include a Return of Premium feature, provided there is no mix and match involved.
In addition, a number of Operating Procedures have been adopted by the IIPRC. These set out the IIPRC rulemaking process, how filings are to be made, public access to filings, and appeals procedures, among other things.
One issue addressed by the Operating Procedure for Filing and Approval of Product Filings is “mixing and matching” of IIPRC approved forms with state approved forms (for example an IIPRC policy with a state approved application). State approved and IIPRC forms may generally be used together, provided there are no inconsistencies between the forms. The department removed this time limit, allowing state approved and IIPRC approved forms to be “mixed and matched” for an indefinite period.
Filing fees for IIPRC submissions are structured as follows:
1. A $500 fee per policy or contract; and
2. A $5,000 annual fee for each insurer filing with the IIPRC.
Insurers who register after June 30th may have the annual fee prorated to $2500. Reduced fees for “regional insurers” (insurers who file in 5 or fewer IIPRC states) are also available.
These fees will be in addition to state filing fees, which will continue to be payable.
The headquarters of the Interstate Insurance Product Regulation Commission are in the District of Columbia. Mary Jo Hudson, Director of the Ohio Division of Insurance is the IIPRC Management Committee Chair. Karen Schutter is the Executive Director for the IIPRC.
The Management Committee of the IIPRC, which manages the affairs of the Commission, is made up of representatives of the member states. The Management Committee Members include the six largest Compacting States by premium volume, four mid-size states by premium, and one additional state from each of four regional zones.
There are also an Industry Advisory Committee and Consumer Advisory Committee which are given opportunity to provide input regarding IIPRC activities.
The IIPRC has hired staff for review of filings and will continue to add staff as filing volume increases. Filings are to be approved or disapproved within 60 days, subject to certain limitations.
FCA is committed to staying on top of these changes and will keep you informed of any changes.
